Insurance company IPO up for grabs

‘Rs10 offer is higher than December 2010 book value’.

Express August 01, 2011


TPL Direct Insurance Limited (TDI) is looking to generate up to Rs50 million through an initial public offering (IPO), which kicked off on Monday.

TDI has already raised Rs100 million through the book building process by offering 10 million shares at a strike price of Rs10. The cumulative equity injection of Rs150 million into the company is expected to support the existing and future working capital requirements.

TDI is offering five million shares to the general public at Rs10 that is on sale from Monday to Thursday. “The IPO is being offered at Rs10, which is higher compared with its book value of Rs6.31 in December 2010,” says a JS Global Capital research note.

The insurance company witnessed a loss of Rs18 million in 2010, however, the company projects a profit of Rs31.28 million in 2011.

The rationale provided for making the offering above the book value is that the company enjoys the lowest claim ratio in the industry at around 40%, adds the note. The company has the lowest credit period in the industry with 12,000 customers.

The proceeds will also help meet the enhanced working capital requirements arising from the launch of new products. The company plans to launch home insurance, health insurance, bancassurance and new products for motor insurance.

TDI was launched in 2005 as the first direct insurance company in Pakistan with over 12,000 customers. It operates in five major cities of Karachi, Hyderabad, Multan, Faisalabad and Islamabad, with a focused approach, emphasising on niches where it has an advantage. The car insurance provides synergies with its parent entity. As a result, motor portfolio of the company contributes 99.81% to the total premium underwritten. TDI shares 4.3% of the industry’s motor premium.

Published in The Express Tribune, August 2nd, 2011.


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